Strategy Central

[Little Chico]

$NASI is saying "sell!"

I've been studying the $NASI again, which measures the amount of money that is going into $NDX stocks that are rising, versus $NDX stocks that are declining. The $Nasi attempts to answer the question as to whether the inflows or outflows are stronger with a numeric ratio.

The $Nasi has been declining since March 26th which suggests that the $NDX is in a distribution phase or a topping formation. Even though there were 8 days that were up since then, and 7 down, this was misleading as to the intermediate direction, since the index is weighted and a few bullish stocks can exercise greater influence, even while the majority of stocks are actually in a downtrend. Even on these up days, the outflows were actually stronger than the inflows. The $NASI wasn't fooled and continued to show negative readings on bullish days.

The $NASI is telling us that future declines are imminent.

Chico

http://stockcharts.com/h-sc/ui?s=$NASI&p=D&yr=0&mn=1&dy=0&id=p35785105796